BHP class action

Background

On 5 November 2015, the Fundão tailings dam at the Germano mine in Minas Gerais, Brazil collapsed in the largest tailings dam rupture ever recorded. The mudflow killed 19 people and has had a catastrophic and enduring impact on the surrounding communities and the environment.

The mudflow created by the dam rupture ultimately travelled 600 kilometres to the ocean, creating a toxic brown plume visible from space. 700 people lost their homes, 8,500 fishermen lost their livelihoods, and 400,000 people lost access to fresh water. It is the worst environmental disaster in Brazil’s history.

The Germano mine is operated by Samarco Mineração SA, a joint venture of BHP and Vale SA. BHP is an Anglo-Australian owned multinational and the world's largest diversified mining and mineral resources company.

In the period that followed the dam collapse, BHP’s stock price plunged across all markets, falling 22% in Sydney and 23% in London and Johannesburg between 5 November 2015 and 30 November 2015. The class action will seek to recover losses to BHP Ltd and BHP Plc shareholders throughout this period, during which BHP’s combined market capitalisation fell by more than $25 billion.

Allegations

The BHP Class Action is an open class proceeding and seeks recovery of investor losses incurred up to 30 November 2015 by BHP Ltd and BHP Plc shareholders because of BHP’s alleged failure to disclose material information to the market and its alleged misleading or deceptive conduct.

The BHP Class Action alleges that BHP Group Ltd:

(a) contravened its continuous disclosure obligations between 8 August 2012 and 9 November 2015 (inclusive) (Claim Period) by failing to properly inform the Australian Securities Exchange (ASX) of BHP’s knowledge of the Fundão dam (located in the Germano mine in Minas Gerais, Brazil, operated by Samarco Mineração SA, a non-operated joint venture between BHP Billiton Brasil Ltda and Vale SA in Brazil) being at risk of failure, and knowledge that if the dam failed serious adverse human, environmental, and financial consequences would likely result;

(b) engaged in misleading or deceptive conduct by representing to the ASX (by publishing in its annual reports between FY11 – FY15) that:

(i) the primary consideration in every aspect of BHP’s business was the safety of its people and the safety and sustainability of the environment and the communities in which it, and its subsidiaries, carried on business; and

(ii) BHP had effective systems and processes in place to identify and effectively manage risks to the safety of its people and the safety and sustainability of the environment and the communities in which it, and its subsidiaries, carried on business, including the Samarco mining operation.

The BHP Class Action alleges that investors who acquired BHP Ltd or BHP Plc shares in the Claim Period are entitled to compensation for loss and damage caused by or resulting from the conduct of BHP Ltd as alleged in the Third Further Amended Consolidated Statement of Claim dated 25 March 2025.

The allegations are denied by BHP Ltd. BHP Ltd defended the class action and the Proposed Settlement acknowledges that BHP Ltd makes no admission of liability or any other admissions beyond those specifically pleaded in the pleadings filed with the Court in the Proceeding.

Full details of the allegations made by the Joint Applicants and of BHP Ltd’s defence against those allegations are set out in the Third Further Amended Consolidated Statement of Claim and the Defence to the Third Further Amended Consolidated Statement of Claim, which can be found in the ‘Key documents’ section above.

A class action against BHP in the United States on behalf of investors that acquired New York Stock Exchange (NYSE) listed American Depository Shares settled on 9 August 2018. The US proceeding did not (and cannot) recover losses suffered in respect of shares traded on the ASX, LSE or JSE. Investors that participated in the US proceeding, who also acquired BHP Ltd and/or BHP Plc shares may also participate in this class action.

Funding and costs

The BHP Class Action is partially funded by G&E KTMC Funding LLC.

G&E KTMC Funding LLC is backed by Grant & Eisenhofer and Kessler Topaz Meltzer & Check, two of the United States’ most successful and respected shareholder litigation firms.

Pursuant to the financial terms and funding terms for the BHP Class Action, G&E KTMC is exclusively responsible for adverse costs orders and security for costs and has agreed to pay:

(a) all disbursements incurred in the BHP Class Action;

(b) Phi Finney McDonald under its current terms of engagement for performing the legal work; 

(c) premiums associated with after-the-event insurance arrangements procured for the BHP Class Action

(together G&E KTMC’s Expenses).

Maurice Blackburn is performing its legal work on a No Win, No Fee basis, charging a 6.25% uplift in the event the class action is successful.

The Joint Applicants will ask the Court to make an order that both Funded and Unfunded Group Members to the Consolidated Proceeding contribute a pro-rata amount to the costs incurred in conducting the consolidated proceeding and to pay G&E KTMC a percentage of any compensation to which the Funded and Unfunded Group Members become entitled as commission for funding the BHP Class Action. These orders are called “common fund orders” (CFOs).

The Joint Applicants intend to seek common fund orders for:

(a) reimbursement of legal costs inclusive of uplift, disbursements and other litigation expenses incurred by the Joint Applicants in the BHP Class Action;

(b) reasonable settlement administration costs;

(c) reimbursement of costs and premiums paid or payable under the after-the-event insurance arrangements procured for the BHP Class Action; and   

(d) a percentage commission to G&E KTMC of up to 27.5% of the “net recovery”, calculated on the basis of the total settlement minus G&E KTMC’s expenses from its agreement to pay all disbursements incurred in the BHP Class Action, Phi Finney McDonald under its current terms of engagement for performing legal work ,and premiums associated with after-the-event insurance arrangements procured for the BHP Class Action.

The final rate of the common fund order to be sought cannot be calculated exactly at this time. It will be substantially lower than 27.5% of the net recovery, to ensure that the total proposed deductions to the Joint Applicants’ lawyers and G&E KTMC do not exceed 50% of the Settlement Sum (before taking into account accrued interest).